R G Niederhoffer launches alternative UCITS fund on Kepler platform

Contrarian strategy

R G Niederhoffer Capital Management, the New York-based quantitative trading advisor that employs a short-term contrarian investment strategy, has launched an alternative UCITS version of its flagship fund on Kepler Partners’ KLS UCITS platform. Kepler Liquid Strategies was established in 2016 and now has seven sub-funds with a combined AUM north of USD900 million.

The KLS Niederhoffer Smart Alpha UCITS Fund launched on 14 July 2020 and currently has USD47 million in AUM. The regulated vehicle will mirror the US firm’s short-term quantitative managed futures strategy, which has performed particularly well in recent market volatility.

The R G Niederhoffer flagship Diversified Program is designed to outperform during periods of stress, volatility and emotional arousal such as equity market declines, rising interest rate periods, and moments of illiquidity.

These are the conditions in which market participants (both discretionary and systematic) are most susceptible to behavioral biases, markets become more predictable, and where the R G Niederhoffer Diversified Program has succeeded.

Commenting on the launch, Niederhoffer said: “Market volatility is likely to continue for an extended period, and both stocks and bonds have the potential for large moves in either direction. This fund is designed to combine strong stand-alone returns with diversifying downside and upside tail-risk protection for stock and bond investors.

“We feel the conditions are outstanding for the fund’s short-duration, quantitative, directional strategy and look forward to a long partnership with Kepler and our UCITS clients.”

A second fund to be added to the KLS platform is the KLS Ionic Relative Value Arbitrage Fund, managed by another New York-based manager, Ionic Capital Management.

Ionic specialises in relative value arbitrage and volatility strategies across asset classes. Commenting on the roll out of the new fund, the firm’s COO, John Richardson, said that the market volatility witnessed earlier this year “followed by recent record highs, has led to an increased interest in non-correlated strategies, especially during these uncertain times”.

“Its great to be adding more truly diversifying strategies to our platform. Given the current uncertainty we see increased demand from investors for such managers,” Georg Reutter, Senior Partner and CIO at London-based Kepler Partners, tells Hedgeweek.

“Through our KLS Platform, we aim to provide investors access to leading alternative managers, and in both Ionic and Niederhoffer we have found two excellent additions. They are both well-established managers and have navigated several market crises before.”

After some challenging years for the Alternative UCITS sector, Kepler Partners said they had noted a slow down in new launches recently, as investors were focussing their allocations elsewhere. However, the recent pandemic-related sell off has once more shaken up the market “and we feel that alternative strategies are increasingly more relevant in investors portfolios. As such, we don’t expect our two new launches to be the last we see this year,” remarks Reutter.

Reutter says that having started work on both funds towards the end of 2019, it was testament to the professionalism of both the two managers, and investors, “that we were able to successfully launch the funds after working on them throughout the lockdown period”.

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